Cordray confirmed to lead CFPB

After two years of being caught in the middle of Washington’s partisan warfare, Richard Cordray has been confirmed to lead the Consumer Financial Protection Bureau.

The stalemate over Cordray’s nomination was broken after Democrats threatened to change Senate rules so that it would only take 51 votes to confirm nominees for executive branch jobs.

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Cordray was first picked for the job in July 2011, but his nomination has been caught up in the broader battle over the 2010 Dodd-Frank law and whether it solves the problems that led to the 2008 financial crisis or gives the government too heavy a hand in regulating financial markets.

On Tuesday, the Senate voted 66 to 34 to confirm Cordray as the director of the consumer watchdog agency that was created by Dodd-Frank.

The CFPB was created to police products such as credit cards and mortgages in response to complaints that consumers were being fleeced by lenders in the run-up to the 2008 financial crisis.

But Republicans have portrayed the new regulator as too powerful while pledging to block any nominee until the structure of the bureau is changed to give Congress more authority over how it operates, such as by having its budget subject to the annual appropriations process.

That opposition fell apart this week in the face of Democrats’ threat to change Senate rules so executive branch nominees would only need 51 votes to be confirmed.

The debate over Cordray took on a new wrinkle earlier this year after a court ruled that recess appointments to the National Labor Relations Board were unconstitutional, throwing a legal cloud over Cordray’s own January 2012 appointment because it was done on the same day and in a similar manner.

Since then, the bureau has been operating amid legal questions about whether rules written to oversee mortgages and other products during Cordray’s tenure could be thrown out if a court decides his appointment was unconstitutional as well.

But banking lawyers said those issues will largely be moot once the Senate, as expected, now confirms Cordray to lead CFPB.

“I think it will largely if not entirely remove the cloud that overhangs the bureau right now,” said Alan Kaplinsky, the head of the consumer financial services group at the Ballard Spahr law firm.

Sen. Elizabeth Warren (D-Mass.), who is credited with coming with the idea for a consumer bureau while a law professor at Harvard University, was more emphatic Tuesday.

“We now have certainty. There are no more clouds, period,” she told reporters. “Can I say it more definitely? But that’s really the point. This locks all the pieces in place. We now have certainty, period.”

Financial reform advocates heralded the creation of the bureau as part of Dodd-Frank and have heavily lobbied Democrats to press the issue of Republicans blocking a vote on Cordray’s nomination.

Cordray’s confirmation, which comes with a five-year term, would take away the leverage Republicans have been trying to use to force changes on a key pillar of Dodd-Frank.

Still, GOP lawmakers said they will continue to make CFPB an issue with voters.

“It’s an agency that’s out of control, and if you do have a bipartisan commission running the agency, I think you’ll have a better spectrum of views and there will be far more responsive to the American people,” Rep. Sean Duffy (R-Wis.), who has introduced legislation to have CFPB run by a board rather than a single director, told POLITICO.